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If given the job, Christine Lagarde would become the IMF's first female leader

Chancellor George Osborne is to formally nominate Christine Lagarde for the post of managing director of the International Monetary Fund (IMF).

He said the French economy minister was "the outstanding candidate".

The position became vacant after Dominique Strauss-Kahn resigned so he could fight sexual assault charges.

PM David Cameron had suggested the IMF should look beyond Europe for its next chief after appearing to rule out his predecessor Gordon Brown for the job.

The IMF is described by many as the world's "lender of last resort" for countries facing bankruptcy.

First woman

In a statement Mr Osborne said Ms Lagarde had "shown real international leadership as chair of the G20 finance ministers this year".

"She has also been a strong advocate for countries tackling high budget deficits and living within their means," he said.

"We support her because she's the best person for the job, but I also personally think it would be a very good thing to see the first female managing director of the IMF in its 60-year history."

Treasury sources told the BBC's business correspondent Joe Lynam that they were confident she would also get the backing of the Chinese and US governments.

She has already won praise for her credentials from the interim head of the IMF, John Lipsky, the Italian government, the Swedish finance minister and Jean-Claude Juncker, who chairs the eurozone committee of finance ministers.

Germany's Finance Minister Wolfgang Schaeuble told the German weekly Bild am Sonntag that "Europe would have the best chance to secure the post again with Christine Lagarde, if she decides to run".

Other contenders include former German finance minister Peer Steinbrueck; Axel Weber, the former head of the German central bank, the Bundesbank; and Trevor Manuel, former South Africa finance minister.

Possible IMF successors

There is a range of possible contenders for the top job at the International Monetary Fund. Find out about some of them

Christine Lagarde

French finance minister

France

French Finance Minister Christine Lagarde, 55, looks like the leading candidate with backing from France, the UK and Germany. A flawless English speaker, she was voted best finance minister in Europe by the Financial Times in 2009. However, her nationality may count against her as several IMF chiefs have been French.

Agustin Carstens

Governor Bank of Mexico

Mexico

Mr Carstens, 52, is to be nominated by the Mexican finance ministry. He has spent most of his career as an economic policymaker in his home country, becoming governor of the Bank of Mexico in January 2010 after previously serving as the bank's chief economist. He had a successful stint at the IMF from 2003 to 2006.

Trevor Manuel

Ex Finance minister

South Africa

Mr Manuel, 55, is well-respected in global financial circles, having served as finance minister of South Africa from 1996 to 2009. Born in Cape Town under apartheid, he was imprisoned repeatedly by the South African government for political activities in the late 1980s. He has yet to announce his intention to run.

Tharman Shanmugaratnam

Finance minister/deputy prime minister

Singapore

The 54-year-old has been the country's finance minister since 2007 and on Wednesday added the new job of deputy prime minister. With degrees from the London School of Economics and Harvard. He recently became the first Asian to hold the post of chairman of the IMF's policy advisory committee.

Montek Singh Ahluwalia

Economic adviser to India's PM

India

Mr Ahluwalia, 67, is an influential economic adviser to Indian Prime Minister Manmohan Singh and has been a key figure in the country's economic reforms from the mid-1980s onwards. He supports open markets and has pushed the government to end fuel price controls and remove barriers to foreign business. His age may count against him.

Peer Steinbrueck

Former German finance minister

Germany

Mr Steinbrueck, 62, is a long-shot to become IMF chief, in part because he alienated allies of Germany with his fiery rhetoric while serving as finance minister in conservative Chancellor Angela Merkel's "grand coalition" from 2005 to 2009. He also alienated the United States by openly blaming it for the global financial crisis.

Axel Weber

Former head of Bundesbank

Germany

Mr Weber, 54, stunned Europe by announcing in February that he would be stepping down early from his post as head of the German central bank, the Bundesbank. Like Mr Steinbrueck, Mr Weber has a reputation as a loose cannon. Both Germans' chances may have been sunk by their government's support for Ms Lagarde.

Gordon Brown

Former UK Prime Minister

British

The 60-year old former UK prime minister and finance minister has long been seen as a candidate for the IMF job or another big international financial post. But his successor David Cameron - whose support he would need - has dismissed him as a "deficit denier", adding that it was time to look beyond Europe.

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Even before Mr Strauss-Kahn's resignation there had been much speculation that Mr Brown could take on the job, which the Frenchman was expected to vacate anyway in order to run for his country's presidency.

The former PM's aides have reportedly been campaigning on his behalf, but in an interview with the BBC last month, Mr Cameron appeared to block his ambitions.

He said: "I haven't spent a huge amount of time thinking about this. But it does seem to me that, if you have someone who didn't think we had a debt problem in the UK, when we self-evidently do, they might not be the best person to work out whether other countries around the world have a debt and deficit problem".

I can certainly tell you we have never received any public or private communication in the government from Gordon Brown seeking to be a candidate for this position. William Hague , Foreign Secretary

The UK and other major economies have an effective veto on the appointment.

During a visit to South Africa on Friday to promote international development, Mr Brown told the BBC he was not there to "pitch for a job" at the IMF.

The former Labour cabinet minister Tessa Jowell said developing countries would be happy to see Mr Brown appointed as head of the IMF.

"Gordon has appealed directly to those countries - particularly developing countries - who were beneficiaries of his vision and Labour's investment in aid and development," she told Sky News's Murnaghan programme.

"If you want the IMF to be more than the rich countries' institution, then Gordon Brown has an incredibly important contribution to make."

French connection

Foreign Secretary William Hague told the BBC's Politics Show on Sunday: "I can certainly tell you we have never received any public or private communication in the government from Gordon Brown seeking to be a candidate for this position.

"But in any case we regard Christine Lagarde as an outstanding candidate - as the outstanding candidate in the field."

Traditionally the head of the IMF comes from Europe, with America providing the boss of its sister organisation - the World Bank.

With the recent emergence of Brazil, Russia, India and China, many global figures - including the head of the Organization for Economic Co-operation and Development - had called for the IMF job to go to a non-European.

Mr Cameron had appeared to support that suggestion, telling the BBC the IMF could look to "another part of the world" for its next leader.

"If you think about the general principle, you've got the rise of India and China and South Asia, a shift in the world's focus, and it may well be the time for the IMF to start thinking about that shift in focus," he said.

Mr Strauss-Kahn was the fourth Frenchman to have held the IMF's top job. He is currently in New York on bail awaiting trial for sexual assault and attempted rape - charges he denies.